March 27th, 2009

Advertisers Starting to Embrace DVR

By Andrew Barker

Realization sets in about branding opportunities

It takes time to adjust to life-altering changes, and network execs and advertisers all but went through the Kubler-Ross stages of grief when confronted with DVR’s commercial-skip technology, ranging from denial that it would seriously impact advertising, all the way to anger (lawsuits that alleged the technology violated copyright), bargaining (angling for a cut of the profits), to simple hands-in-the-air depression.

Acceptance is the last step, and fortunately, now that the panic has subsided, many are realizing that DVR may hold serious benefits for those who previously felt threatened.

Since bowing on the consumer market nearly a decade ago, DVR has been both a gift and a curse. Given the convenience of watching recorded programming at one’s leisure, and the ability to record one show while watching another, DVR users tend to watch considerably more TV than live viewers. On the other hand, absent any conclusive data on exactly how viewers use the commercial-skip function, nets and advertisers have to contend with the notion that a majority of the estimated 20 million DVR users in this country may be habitually blitzing through the ad breaks.

“There are going to be 50 or 60 million DVRs in homes over the next few years, and the majority of television ads in those homes simply won’t be seen,” warned TiVo CEO Tom Rogers in November. “It’s going to be incredibly painful for advertisers—for the whole television industry—if they don’t comprehend the urgency of that.”

The responses have been many, ranging from increased, and increasingly subtle, product placement to the now ubiquitous (and ever larger and more sophisticated) promo bugs running along the bottom of the screen during programming.

Others use incentives to lure viewers back into the breaks. Last month, “American Idol” (itself already a paragon of product placement, with numerous in-show plugs for Coca-Cola and Cingular/AT&T) ran “embedded auditions” from popular contestants midway through the commercial breaks, forcing viewers to sit through the ads, or at least monitor their fast-forwarding carefully, to catch the hidden content.

On the other end, some advertisers have taken to conceiving commercials as something that can be absorbed both in real time and when seen in fast-forward, emphasizing brand logos and dialing down the narrative complexity.

In short, the us-vs.-them mentality that dominated nets and advertisers’ early relationships with DVR has become a thing of the past, with both parties seriously questioning whether the days of the 30-second ad may be ending. The big difference going forward, however, is that advertisers may be transitioning from simply working around the DVR’s intricacies to actively embracing them.

“We need to start thinking about DVR as an advertising platform itself, not just as this obstacle that lets people fast-forward through the commercials,” says Andy Donchin, director of national broadcast for media agency Carat North America. “We have to think about where it will be going forward, as technology changes and more households adopt. It’s inevitable that DVR will spread to more homes, so let’s learn more about it.”

Donchin notes that “TiVo is really ahead of the curve” in terms of proposing solutions to the problems that the spread of DVR have wreaked on advertisers. “A lot of their concepts are very attractive to us.”

Most of the next-gen concepts being bandied about by TiVo and others are decidedly Internetlike in their interactivity and use of narrowly targeted marketing. One idea is that the DVR menu itself would function like a Web browser, selling ad space in the margins. Another involves adding hyperlinks to commercials, such that viewers can order products advertised via remote, a la Amazon (or Willy Wonka).

Perhaps the most auspicious developments for advertisers concern the targeting potential of new technologies, in which a household’s viewing habits would help determine what kind of commercials they would see. By eliminating much of the guesswork inherent in TV advertising, Donchin notes, such technologies could “help eliminate waste, which is something we’re always striving to do.”

Whatever the future holds for TV advertising, the mood is one of reconciliation with what was only recently considered hostile technologies.


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